2013年货币银行学名词解释复习

adverse

selection

：

The

problem

created

by

asymmetric

information

before

a

transaction

occurs:

The people who are the most undesirable from the other party

’s

point of view are the ones who

are most likely to want to engage in the financial transaction. 35

arbitrage

：

Elimination of a riskless profit opportunity in a market. 341

asset

management

：

The

acquisition

of

assets

that

have

a

low

rate

of

default

and

diversification

of asset holdings to increase profits. 219

capital adequacy management

：

A bank

’

s decision about the amount of capital it should maintain

and then acquisition of the needed capital. 219

capital market:

A financial market in which longer-term debt (generally with original maturity

of greater than one year) and equity instruments are traded. 25

collateral:

Property that is pledged to the lender to guarantee payment in the event that the

borrower is unable to make debt payments. 184

coupon rate:

The dollar amount of the yearly coupon payment expressed as a percentage of the

face value of a coupon bond. 68

credit risk:

The risk arising from the possibility that the borrower will default. 219

credit

view:

Monetary

transmission

mechanisms

operating

through

asymmetric

information

effects

on credit markets. 650

debt deflation:

A situation in which a substantial decline in the price level sets in, leading

to a further deterioration in firms net worth because of the increased burden of indebtedness.

205

default risk:

The chance that the issuer of a debt instrument will be unable to make interest

payments or pay off the face value when the instrument matures. 129

defensive open market operations;

Open

market operations

intended to

offset movements in

other

factors that affect the monetary base (such as changes in Treasury deposits with the Fed or

changes in float). 439

discount bond:

A credit market instrument that is bought at a price below its face value and

whose face value is repaid at the maturity date; it does not make any interest payments. Also

called a zero- coupon bond. 68

discount

loans:

A

bank

’s

borrowings

from

the

Federal

Reserve

System;

also

known

as

advances.

214

discount window:

The Federal Reserve facility at which discount loans are made to banks. 442

dynamic open market operations:

Open market operations that are intended to change the level

of reserves and the monetary base. 439

excess reserves:

Reserves in excess of required reserves. 214, 394

exchange

rate

overshooting:

A

phenomenon

whereby

the

exchange

rate

changes

by

more

in

the

short

run than it does in the long run when the money supply changes. 172

expectations theory:

The proposition that the interest rate on a long-term bond will equal the

average of the short-term interest rates that people expect to occur over the life of the

long-term bond. 138

financial

crisis:

A

major

disruption

in

financial

markets

that

is

characterized

by

sharp

declines

in asset prices and the failures of many financial and nonfinancial firms. 200

financial intermediaries:

Institutions (such as banks, insurance companies, mutual funds,

pension funds, and finance companies) that borrow funds from people who have saved and then

make loans to others. 8

financial

panic:

The

widespread

collapse

of

financial

markets

and

intermediaries

in

an

economy.

42

foreign exchange market:

The market in which exchange rates are determined. 6, 151

forward exchange rate:

The exchange rate for a forward transaction. 153

free reserves:

Excess reserves in the banking system minus the volume of discount loans. 467

free-rider problem:

The problem that occurs when people who do not pay for information take

advantage of the information that other people have paid for. 189

interest parity condition:

The observation that the domestic interest rate equals the foreign

interest rate plus the expected appreciation in the foreign currency. 162

interest-rate

risk:

The

possible

reduction

in

returns

associated

with

changes

in

interest

rates.

85, 220

intermediate

target:

Any

of

a

number

of

variables,

such

as

monetary

aggregates

or

interest

rates,

that

have

a

direct

effect

on

employment

and

the

price

level

and

that

the

Fed

seeks

to

influence.

458

junk bonds:

Bonds with ratings below Baa (or BBB) that have a high default risk. 131

law of one price:

The principle that if two countries produce an identical good, the price of

this good should be the same throughout the world no matter which country produces it. 155

lender of last resort:

Provider of reserves to financial institutions when no one else would

provide them in order to prevent a financial crisis. 444

leverage ratio:

A bank

’s

capital divided by its assets. 283

liability management:

The acquisition of funds at low cost to increase profits. 219

liquidity

management:

The

decisions

made

by

a

bank

to

maintain

sufficient

liquid

assets

to

meet

the bank

’s

obligations to depositors. 219

liquidity premium theory:

The theory that the interest rate on a long-term bond will equal an

average

of

short- term

interest

rates

expected

to

occur

over

the

life

of

the

long-term

bond

plus

a positive term (liquidity) premium. 143

loanable funds framework:

Determining the

equilibrium interest rate by

analyzing the supply of

and demand for bonds (loanable funds). 100

maturity:

Time to the expiration date (maturity date) of a debt instrument. 23

monetary

aggregates:

The

various

measures

of

the

money

supply

used

by

the

Federal

Reserve

System

(M1, M2, and M3). 57

monetary

base:

The sum of the Fed

’s

monetary liabilities (currency

in

circulation and reserves)

and

the

U.S.

Treasury

’s

monetary

liabilities

(Treasury

currency

in

circulation,

primarily

coins).

394

money

market:

A

financial

market

in

which

only

short-term

debt

instruments

(generally

those

with

original maturity of less than one year) are traded. 25

money multiplier:

A ratio that relates the change in the money supply to a given change in the

monetary base. 412

moral

hazard:

The

risk

that

one

party

to

a

transaction

will

engage

in

behavior

that

is

undesirable

from the other party

’s

point of view. 36

multiple deposit creation:

The process whereby, when the Fed supplies the banking system with

$$1 of additional reserves, deposits increase by a multiple of this amount. 402

nonborrowed monetary base:

The monetary base minus discount loans. 420

off-balance-sheet activities:

Bank activities that involve trading financial instruments and

the generation of income from fees and loan sales, all of which affect bank profits but are

not visible on bank balance sheets. 236, 284

open market purchase:

A purchase of bonds by the Fed. 395

open market sale:

A sale of bonds by the Fed. 395